Banks and retailers commonly supply consumers with transaction cards, including charge cards and debit cards, in order to provide a system for non-cash transactions. Originally these cards contained an embossed card account number on the front, and an area for a card holder signature on the back. These early cards provided a means for retailers to record the embossed card number by use of an imprinter at the point of sale. As banks began issuing credit cards to individuals, credit limits were set. This added a new step at the point of sale, wherein the sales clerk would call the issuing bank to verify that the consumer had sufficient credit to make the purchase at hand. This protected the retailer and the bank against individual card holders who had no available credit. However, it did not ensure that the individual who presented the card was the rightful cardholder.
To prevent fraudulent use of a card by a non-cardholder, a sales clerk would additionally compare the signature on the back of the transaction card against the signature on the transaction receipt. Often times a second form of identification such as a driver's license was required. Comparison of signatures and requiring second identification are ineffective against fraudulent use because they are subjective comparisons and forgery is commonplace. The signature comparison and telephone verification do very little to deter fraudulent use, and in addition cause unacceptable delays at the point-of-sale. In response to these delays magnetic stripe technology was introduced to credit cards. Point-of-sale magnetic stripe card readers accomplished what a phone call did previously, and in a much shorter period of time. Over time less focus on authorized use developed because of the need for more rapid processing at point-of-sale. In fact, speed of transaction has become more important than unauthorized use.
In general, transaction cards and card reader systems have evolved in response to needed efficiency at point-of-sale. Authorized use of transaction cards has always been important to both the issuer and the cardholder, but verifying authorized use has always been time-consuming and has often caused delays at point-of-sale. Comparison of cardholder signature is the predominant method of verification, along with a request for a second form of identification. Cardholder photographs affixed to the front of the cards have also been added as a measure of security. Methods for added security and speed of transaction at point-of-sale have always been mutually exclusive. The more scrutiny at point-of-sale, the slower the transaction. Issuing banks want cardholders to use their cards. Retailers want to offer transaction cards as an option of payment but do not want to delay customers any longer than necessary. Cost goes up for the retailers and customer satisfaction goes down as a result of delays. Numerous patents have been filed in recent years to address this problem but all are inadequate in one sense or another. The cost of fraud is thus accepted by the issuers and often times passed along to the cardholders in the form of higher interest rates.
There thus exists a delicate balance between consumers, retailers, banks, and credit card associations in regard to security, speed at point-of-sale, and cost of transaction card systems. Previous fraud-prevention measures, relating to enhanced security innovations for transaction cards which did not take into consideration existing magnetic stripe technology, the size of existing transaction cards, and existing credit/debit card reading systems are not commercially viable.
The following U.S. Patents relate to security measures designed to prevent transaction card fraud.
______________________________________ U.S. Pat. No. Issued Inventors ______________________________________ 4,701,601 Oct. 20, 1987 Francini, et al. 4,795,898 Jan. 3, 1989 Bernstein, et al. 5,255,941 Oct. 26, 1993 Solomon 5,269,649 Nov. 9, 1993 Shomron 5,276,311 Jan. 4, 1994 Hennige 5,412,192 May 2, 1995 Hoss ______________________________________
Francini '601 is a transaction card which contains a numeric keypad and a magnetic stripe emulator. This card differs from the usual configuration of present transaction cards by not having embossed numbers for use in card imprinter systems. It also introduces a complex emulator which may not work with existing card reader systems and may be expensive to produce. This card does not contain a periodically changing pre-selected identifying symbol which corresponds to the card issuer's database.
Bornstein '898 is a personal memory card which does not contain a numeric keypad or its own source of internal power. It cannot be personally activated at the point-of-sale, and requires a new card reader system which does not use the current standard magnetic stripe technology. The card technology of Bornstein would thus require a complete change from the current standard technology, which would be very disruptive and expensive.
Shomron '649 is an antifraud transaction card which offers some advantages, but which has the disadvantage of requiring the cardholder to remember a great deal of information in order to use the card.
Hennige '311 is an antifraud and programmable transaction card which can store information regarding numerous transaction card accounts on one card, and has the capability of pulling up the cardholder's signature for verification. This invention is costly and requires a total change of card reading systems, since it does not utilize magnetic stripe technology. Further, the process by which this invention is used at point-of-sale still relies on subjective comparison of signatures.
Hoss '192 is a radio frequency (R.F.) activated charge card which can be altered by an R.F. signal transmitted by the card issuer intended to change the status of the card. This feature has some value, but the antifraud characteristics of the card will do little to deter fraudulent use by an unauthorized user.
It is the primary objective of the present invention to provide a new and improved transaction card capable of greatly deterring unauthorized use, while eliminating subjectivity at point-of-sale, thus reducing transaction time. In addition, this invention interfaces with current card reader and hardware systems, eliminating the need for large investment in new hardware systems. Further objects and advantages will become apparent from a consideration of the drawings and ensuing description.